The State of the Economy - why the bailout may have been necessary afterall

I have to confess that my liberal political bent still has not reconciled itself to the bailout of the financial sector yet. Nor has it come to terms with many other economic urban legends, such as the notion that the U.S. is no longer a manufacturing nation. No friends, I remain skeptical, but as skeptical as I once was.

Regular readers will note that I tend to go to original source data whenever I can, read and analyze it myself, and then draw my own conclusions. And I see no reason why the state of the economy should be an exception.

As luck, or good bureaucratic planning, would have it, the Census Bureau is able to help me look at both the question of "Are we still a manufacturing country" and did the financial sector really deserve a bailout. See, every 5 years, Census goes out and does a look at business. They collect sector specific statistic on number of employees paid, number of businesses in each sector, receipts, and payroll expenses. And they make it all available on the web. So, thanking my colleagues in that federal agency, I downloaded the data, and ran some graphs. The first is presented here - I'll be doing some more posts in the days ahead with other parts of the data.

I'll call two things to readers attention. First, with regards to manufacturing, I fail to see how we are no longer a manufacturing nation when that sector of the economy did $5.3 Trillion in 2007 business. Thats more then the individual Gross Domestic Product of every other country in the world. Nice try alarmists, but we seem to be doing just fine making things these days.

As to the financial sector bailout - no wonder Citi is giving raises, and Goldman Sachs expects their best year ever. The Financial and Insurance sector did $3.6 Trillion in 2007, meaning that $1 Trillion in loans and bailouts secured about 1/3rd of their receipts for 2009, without them having to really do much of anything. I'd love a pay plan like that, as I'm sure would a lot of small business owners. Interestingly, there were only 4 countries in 2008 that had GDP's higher then the Receipts of the U.S. Financial sector - The U.S., Japan, China, and Germany in that order.

The really galling part of the bailouts, however, is that the financial sector only had payroll expenses (the yellow line) of $494 Billion that year. The rest, I'm sure, went to a lot of overhead, but there is still ENORMOUS profit built in there. One wonders how much, if any was set aside in reserves. One suspects that a lot could have been.

So where does that leave taxpayers? Well, to be sure based on a receipts basis, if the financial sector had collapsed, it would have significantly hurt the U.S. economy. The numbers bear that out. But at the same time, the numbers also show that there are still plenty of other sectors that could have helped offset the loss. I know it isn't a perfect assessment, but I am left with even more questions then before.

DC Metro crash - lending a helping hand

The next time you hear a story about a federal bureaucrat who isn't worth much, consider this . . .

NOAA Corps Officer Helps Injured D.C. Metro Rail Riders at Scene


Peter Fischel
NOAA Fisheries


June 25, 2009 — Like most people on Washington’s Red Line Metro train Monday, June 22, LTJG Victoria Zalewski expected her trip downtown to be like any other weekday commute — until she heard the crash and felt the jolt.

Zalewski, a NOAA Corps officer serving with the National Marine Fisheries Service, was riding in the train that was struck from behind by another Metro train, which ended up on top of the other.

On Republicans and Family Values - Mr. gingrich, tear down that wall!

With the admission by South Carolina Governor Mark Sanford that he has been having an affair with a “dear, dear friend” from Argentina, the Republican Party and their conservative supporters have once again failed the morality test. The revelations of similar conduct last week by Senator Ensign, coupled with the past transgressions of Senator Vitter and Senator Craig should point out to the Republican Party that it has both an image problem, and a far more pernicious but less notice action problem.

The image problem is simple – after spending most of the last two decades railing against the loss of “family values,” Republicans have now lost any moral high ground from which to attack Democrats. Sure, many still rail against Bill Clinton for his affair with Monica Lewinski, but they at least managed to impeach him over his subsequent conduct. That he was found not guilty in that proceeding is often overlooked. Now, however, we’ve had four senior Republicans rolled out in the last two years as unfaithful within the context of a “traditional” marriage, thus betraying one of the “family values” – the sanctity of that marriage between a man and a woman – which they so fervently howl over.

That veil lifting leads to problem number two – a lack of action, or actions in contradiction to rhetoric. To begin with, none of the Republicans in question were forced to resign much of anything – though voters did take care of Mr. Craig on their own. Mr. Vitter remains in office, but Louisiana politics are extreme at best, so I am not really surprised. It remains to be seen what happen to Mr. Ensign and Mr. Sanford, but I won’t hold my breath. None of these folks resigned publically, and no one from within their own party has called for their resignations, though they easily could on grounds of moral turpitude. None of them has been impeached either.

So, if the Republicans came to me and asked for advice, I’d tell them this: Hold a national caucus with all the Governors, Senators, and Congressmen. Give them one chance to come clean with their fellow Republicans, and then resign voluntarily from their posts. If they don’t then don’t give them a single dime in their next election. Don’t let Republican Political Action Committees give them a single dime either, or buy issue or attack ads. Make it perfectly clear to subsequent candidates that this won’t be tolerated.

Then, go to Capitol Hill and introduce meaningful legislation that addresses real threats to real family values. Put out a healthcare reform alternative that protects children and family budgets by making healthcare (particularly primary and preventive care) both available and affordable to all. Pass federal legislation to curb both the need for and the devastating effects of divorce. This is a public health and economics issue that affects the entire country and reform should come from the federal level. Strengthen environmental laws that ensure clean air, water, and sustainable use of earth’s natural resources, so individual families no longer have to witness the devastating effects of pollutants on their kids.

And tell twice divorced (due to affairs) Newt Gingrich to take a hike.

Commended for your reading: NeoMugwump: Being Fiscally Conservative Means Having to Raise Taxes. Sometimes.

As you all know, I try not to spend a lot of time just cross-posting the work of others. That has its place in the blog-o-sphere, but I think it is over done. Sadly, work and family are taking too much of my time these days to keep up myself, so I'm borrowing an idea from NeoMugwump, and inviting your consideration.

NeoMugwump: Being Fiscally Conservative Means Having to Raise Taxes. Sometimes.

DC Metro train collision - a regular rider's perspective

As you all probably know, there was a 2 train crash today at 5PM on the Washington DC Metro. Two trains travelling the same direction on the Red line (into DC at the Fort Totten station) ran into each other. The first train was sitting waiting for a preceeding train to clear the platform, and was rearended by another train, at speed. Local News coverage has been extensive, and two cars of the impacting train are still sitting on top of the impacted train. NTSB is on scene, as is DC FIre and Rescue and a host of other rescue personnell (over 200 at last count). At the 8PM press conference, there were 6 confirmed dead, and between 70 and 100 injured.

From a railroad operations perspective, this is a tough location for an accident. In that area Metro runs between the two CSX tracks, and so outside of the Metro track there are CSX, MARC and Amtrak trains running in both directions (between 18 and 24 trains daily). CSX has already announced a suspension of service, and I suspect Amtrak and MARC will have to follow suit.

I ride these trains daily. Had I not been working late on some Congressional questions regarding our 2010 budget request, I might well have been on one of those trains. Many of my colleagues and friends were. Thankfully, we know of only one injury, and she is already home, though sore and bruised.

As you go about your work for the next few days, I would ask that you take a moment and remember both the folks killed and injured today, and all those killed in previous train incidents. Rail transport of goods and people is extremely safe, whish makes these incidents all the more intense when they do happen.

Your local news outlets will no doubt have more coverage in the next few days, though I'll be happy to provide information if folks want.